The White House budget proposal is seeking bankruptcy for Amtrak, the only intercity passenger rail service in the United States. Amtrak is vital to our country. It provides the only passenger transportation option through many parts of rural America, and the only reasonably-priced option in many others that have only non-competitive air options to choose from. It is also vital for those that can’t drive. Finally, Amtrak operates the vital commuter rail service in the Northeast Corridor (NEC), which extends from Boston to Washington, D.C. Amtrak is the only way for many people to get to work each day or to go on business trips, due to the highly congested roads in the region.
Here’s a little history on Amtrak.
Railroads were a vital part of the nation’s expansion beginning in the late 1800s. Government programs encouraged the private railroads to expand by giving them large amounts of land (that they could then sell at profit) and through other means. Railroads were vital carriers of people and freight clear through the 1950s, and remain vital carriers of freight today. In urban areas, railroads also provide the most effective way to move large numbers of people.
One thing many people don’t know is that passenger operations almost never made a profit for the railroads.
After World War II ended, there was a heavy push towards the automobile from many areas. The federal government subsidized the building of thousands of miles of new highways and other automobile infrastructure. Also at that time, governments at all levels were spending money to support air travel. Meanwhile, the railroads had been taxed to their limit during the war effort, and every part of their infrastructure was in serious disrepair. They did not receive federal assistance.
Remember that railroads were all private companies, such as Union Pacific and New York Central. They were facing serious financial problems and began attempts to discontinue the money-losing passenger service. However, back at that time, many industries — including railroads — were “regulated industries”. They couldn’t make any major changes without government approval, and the government wouldn’t let them cancel passenger service. The inevitable result was a decline in service quality as corners were cut with staffing, maintenance, etc.
Finally, in 1971, matters came to a head. The federal government agreed to let the private railroads stop offering passenger service if the railroads gave their passenger equipment and employees to a new government-backed corporation — Amtrak. Amtrak would receive government subsidies to continue providing vital passenger rail service. The day Amtrak began, they inherited all the neglected equipment from the private railroad companies, and immediately canceled many routes due to lack of funds.
Amtrak has more or less limped along until the present day. It has had a string of problems, including never once receiving adequate funding from Congress, several incompetant CEOs (these are appointed by the White House and Congress), and its own difficult start.
Today, Amtrak continues to limp along. It received $1.2 billion last year, instead of the $1.8 billion it asked for. That means that, once again, corners have to be cut to get by. In 2002, the federal government provided $32 billion in subsidies for roads, $14 billion in subsidies for air travel, and less than $1 billion for Amtrak.
This year, the Bush administration is proposing about $360 million for Amtrak. This is a number that will force Amtrak into bankruptcy. They view the $1 billion or so that Amtrak gets each year as a “subsidy”, but the $32 billion spent on roads as an investment.
Strangely, the administration believes that forcing an Amtrak bankruptcy is a good thing and that private companies will be eager to operate rail services.
Unfortunately, they have forgotten the reason Amtrak exists in the first place.
Also, they have forgotten that almost no passenger transportation methods anywhere in the world can make a profit. Billions of dollars of federal, state, and local money support air travel — building airports, paving runways, operating traffic control systems. Railroads must pay for all of their infrastructure by themselves.
In reality, Amtrak is a true bargain.